Back from exile, the American consumers are once again powering their nation as the world’s largest economy. Fresh data on Tuesday show the the US has shifted from slow growth to rapid growth, expanding 5 percent in the third quarter, the biggest growth figure in 11 years. The main driver has been the US consumer who make up 70% of the economy. Based on the November data, consumer spending has increased 4% in the final three months – the fastest pace in the last four years.
Times are looking quite good for America. With more Americans spending, prices of oil falling, business confidences will continue to grow. They have managed to shed $1 trillion worth of debt since the recession. S&P 500 has been surging along for the last week. It is all smiles. “The recovery that was building in 2012 and 2013 is finally coming to full fruition,” said Peter Hall, chief economist at Export Development Canada. “Consumers are getting out and interacting with the economy in a way that they haven’t for the last six years, and they’re confident doing it.”
A major concern in 2015 will be the difference in fortunes between the US and other developed countries. With Germany and Japan predicted to have low growth rates in 2015, America may face a similar situation as they did in 2000 where they ended up falling into a small recession. However this time it will be harder to get out as there will be less tools to use.
The Junior Economist 